Galileo in doubt as transport ministers block EU funding

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The Independent Online

The future of a £2bn scheme to develop a new global satellite navigation system was in doubt last night after European Union transport ministers refused to approve funding for the project.

Britain and five other member states balked at the overall cost of the Galileo project and demanded another three months to study it before committing a further 450m euros (£281m) in development funding.

Loyola de Palacio, the European transport commissioner, said she would now appeal direct to a summit next week of EU leaders at Laeken, near Brussels, for the authority to start development work. "If there is no agreement before the end of the year, then you can say goodbye to Galileo," Ms Palacio added.

Galileo will be Europe's answer to the rival US satellite navigation system, GPS, originally developed for military use. More than 100 commercial applications have been identified for the system although the biggest by far will be pinpointing consumers through receivers built into their mobile phones and then sending them information about local shops and services.

Apart from Britain, Germany, Denmark, Austria, the Netherlands and Sweden also opposed the funding. The strongest supporters of Galileo were France, Italy and Spain.

A report carried out by PriceWaterhouseCoopers for the European Commission last month estimated it would cost £800m to develop Galileo and £1.5bn to deploy it through a network of up to 38 satellites. It also said that member states would have to fund the running costs in the early years because revenues would not be sufficient to cover them.

The main industrial backer of the project, the Astrium consortium, in which BAE Systems has a 50 per cent stake, claims Galileo will support 146,000 jobs across Europe and generate £3.6bn of work for UK suppliers. Other backers include EADS, Thales and Alcatel. Privately, the industrial partners are hopeful that the project will not be killed off even if no agreement has been reached by the end of the month. A similar threat was made by Ms de Palacio a year ago when Galileo was seeking an initial 100m euros of funding. In the event the money was not approved until April.